By Carl Chiarella, Peter Flaschel, Willi Semmler

This publication represents the 1st of 3 volumes supplying a whole reinterpretation and restructuring of Keynesian macroeconomics and an in depth research of the disequilibrium adjustment procedures characterizing the monetary, the products and the labour markets and their interplay. It questions in an intensive approach the evolution of Keynesian macroeconomics after international battle II and specializes in the restrictions of the conventional Keynesian process till it fell aside within the early 1970s, as good as the inadequacy of the recent consensus in macroeconomics that emerged from the Monetarist critique of Keynesianism.

Professors Chiarella, Flaschel and Semmler examine uncomplicated methodological matters, the pitfalls of the Rational expectancies institution, very important suggestions channels within the culture of Tobin’s paintings, and theories of the wage-price spiral and the evidences for them. The ebook makes use of basically partial ways, the mixing of in order to be the topic of next volumes. With its specialize in Keynesian propagation mechanisms, the examine during this ebook offers a special substitute to the black-box shock-absorber techniques that dominate glossy macroeconomics.

Reconstructing Keynesian Macroeconomics will be of curiosity to scholars and researchers who are looking to examine choices to the mainstream macrodynamics that emerged from the Monetarist critique of Keynesianism.

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Extra info for Reconstructing Keynesian Macroeconomics Volume 1: Partial Perspectives

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A typical example is given by the famous Keynes-effect, according to which money wage decreases can revive the economy if they lead to price level decreases and therefore to increases in real balances of the household sector, which induces xliv Reconstructing Keynesian Macroeconomics TraditionalKeynesiantheory:summary Markethierarchiesand supply-sidefeatures Feedbackmechanisms Feedbackpolicyrules Dombusch exchange rate dynamics Money supply rule Taylor interest rate rule Keynes effect Asset markets Blanchard equity and bond dynamics r,r1,...

How strong are the repercussions? How dominant are the supply-side dynamics? 1 Advanced Keynesian disequilibrium growth dynamics: graphical summary of fairly sluggish or fairly fast, but never infinitely fast, feedback adjustment mechanisms. lower interest rates on the financial markets which in turn stimulate investment and thus effective goods demand, leading finally to increases in employment and thus to a check to further decreasing wages that is capable of moving the economy back to its full employment level.

We will collect in this section some arguments which we believe show that such a methodological approach to the study of macrodynamic systems is much too narrow and one-sided to allow for a fruitful analysis of actual behavioral possibilities for economic agents, the stock-flow interactions that they imply, and the complex dynamics that such behavior may generate when cumulative processes and macroeconomic feedback mechanisms become effective in nonmarket clearing situations. Indeed, as the assumption of the extremely well informed forward-looking agents and rational expectations by now have become an undeniable “truth” for many macroeconomists, the stability of the economy (and the well behaved impulse-response functions generated after anticipated and unanticipated shocks) implied by its mathematically very demanding structure has become a “goes without saying” matter in the current macroeconomics literature.

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